Fox News financial analyst Charlie Gasparino offered little sympathy for credit ratings agency Standard & Poor (S&P) following allegations that the White House is exacting revenge over a credit downgrade, saying that “you kinda want them both to kill each other.”
Gasparino spoke with Fox’s Neil Cavuto Wednesday about the new report, which claims that former Treasury Secretary Tim Geithner promised S&P it would be held “accountable” for its 2011 move to downgrade the U.S. government’s credit rating. Many have characterized Geithner’s remarks as a thinly-veiled threat against the private agency, particularly since the government filed a $5 billion fraud lawsuit against S&P just weeks later.
Though the analyst didn’t dispute that characterization, he did note that both sides may have a point in this case. “I know we’re trying to look for white hats and black hats here,” he began, “[but] you kinda want them both to kill each other. The government created the financial crisis along with S&P, and now the government is going after S&P.”
S&P is being sued for deliberately rating junk mortgage-backed securities much higher than they were actually worth, prompting unsuspecting investors to buy billions of the worthless product. The government, amongst other things, pushed absurdly risky mortgage policies on banks in an effort to increase home ownership in impoverished communities.
S&P was hardly the only ratings agency accused of purposefully gussying up junk bonds. But Gasparino thinks they may have been the worst. “Some of the emails out of S&P were pretty bad,” he claimed. “I think net-net — and this is not how justice should be done — net-net, the emails, the evidence on the S&P side is a little worse than [other ratings agencies].”
But Cavuto still sees political payback in the government’s equation. “S&P is the only one of the ratings agencies that ultimately downgrades U.S. debt from AAA. It was a big deal. And I said at the time — I say to you now — that that more than smells funny.”
“[Geithner] doesn’t run the Justice Department, but his boss does,” Gasparino agreed. “Bottom line is, this was a black eye for President Obama. President Obama is very close to Eric Holder. The onus is on the federal government — on the Obama administration — just to tell us what was materially different from S&P’s behavior and [other ratings agencies].”
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